Glossary · Reading the business
Recognized Environmental Condition(REC)
In short
An environmental term for the presence or likely presence of hazardous substances or petroleum products on a property, indicating potential contamination.
What it means in a deal
If a Phase I Environmental Site Assessment identifies an REC, it means there's a past or current condition that suggests contamination. This could be anything from old underground storage tanks to spills. An REC usually triggers a recommendation for a Phase II Environmental Site Assessment to determine the extent of the contamination and cleanup costs.
Related terms
Common questions about Recognized Environmental Condition
- What if a Phase I ESA identifies a Recognized Environmental Condition (REC) but deems it a 'de minimis' condition?
- When a Phase I Environmental Site Assessment (ESA) identifies a Recognized Environmental Condition (REC), what are the lender's subsequent responsibilities?
- What steps should a lender take if a Phase I ESA identifies a Recognized Environmental Condition (REC)?
- What are a lender's responsibilities if a Phase I Environmental Site Assessment (ESA) identifies a Recognized Environmental Condition (REC) but recommends no further action?
- If a Phase I Environmental Site Assessment (ESA) identifies Recognized Environmental Conditions (RECs), what are the next steps for a lender?
- What are a lender's responsibilities if a Phase I ESA identifies Recognized Environmental Conditions (RECs)?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
Pressure-test the numbers before you make an offer
Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
Free · No documents · Usually same-day
Backed by data on 1,000+ SBA lenders and 300,000+ funded deals. Your details go only to lending partners you ask to be matched with — never sold to advertisers.